{"id":114470,"date":"2025-11-02T19:25:07","date_gmt":"2025-11-02T19:25:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/114470\/"},"modified":"2025-11-02T19:25:07","modified_gmt":"2025-11-02T19:25:07","slug":"fraud-and-double-dipping-as-kiwisaver-hardship-withdrawals-spike","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/114470\/","title":{"rendered":"Fraud and double-dipping as KiwiSaver hardship withdrawals spike"},"content":{"rendered":"
\u201cI think it\u2019s concerning because behind every application is a person, a New Zealand family who\u2019s struggling to make ends meet.<\/p>\n
\u201cParticularly at this time of year \u2013 it\u2019s meant to be a time for celebration and looking forward with positivity and instead, for so many, there\u2019s just hardship and people are struggling.\u201d<\/p>\n
Callanan said the Public Trust was seeing a growing number of KiwiSaver members coming back repeatedly for hardship withdrawals.<\/p>\n
\u201cThat may be as high as 50% of the applications that we\u2019re processing at the moment,\u201d he said.<\/p>\n
\u201cThat\u2019s definitely contributing to the increase in volumes.\u201d<\/p>\n
Cost-of-living pressures continued to be a major driver of the figures, Callanan said.<\/p>\n
\u201cThe pain is still being experienced out there. Essentials like housing, groceries, utilities, medical expenses, they\u2019re all significantly higher than four or five years ago.<\/p>\n
\u201cThen if you couple that with unemployment levels … and underutilisation data, that signals people aren\u2019t getting the work that they need, aren\u2019t getting the income that they need to make ends meet.\u201d<\/p>\n
Callanan said most applications typically involve changes in someone\u2019s life such as employment circumstances or one-off unexpected costs that cause them a setback.<\/p>\n
\u201cBut now we\u2019re also just seeing people who found themselves in arrears with bills. They\u2019re unable to pay off their credit card, they\u2019ve just run out of that rainy-day savings account.<\/p>\n
\u201cFor many, KiwiSaver is the last accessible pool of funds when you\u2019re in a crisis.\u201d<\/p>\n
Callanan said the Public Trust was also seeing a \u201csignificant increase\u201d in the frequency of hardship fraud.<\/p>\n
\u201cThis is concerning because it\u2019s people who are defrauding themselves. They\u2019re fraudulently preparing documents [to prove hardship].<\/p>\n
\u201cPreviously, we would go a month or more without seeing one. We\u2019re identifying them on a daily basis now.<\/p>\n
\u201cIt probably shows there is a degree of desperation and hardship that does exist out there that people would go to that length.\u201d<\/p>\n
Cost-of-living pressures continue to bite for many Kiwis. Photo \/ 123rf<\/p>\n
Callanan said there were strict rules around getting a hardship withdrawal which required multiple layers of review, along with evidence such as bank accounts, bills and debt.<\/p>\n
\u201cFor hardship, we need to be able to compile a budget and get that sense that you really are going backwards, week in and week out. And that\u2019s when you really do need that help.\u201d<\/p>\n
The Public Trust reviews all hardship and serious illness withdrawals and is a supervisor for 14 KiwiSaver schemes, including four of the six default providers.<\/p>\n
Callanan said generally it was willing to pay up to 13 weeks of living expenses.<\/p>\n
\u201cThat\u2019s to try and avoid the situation where we\u2019re inappropriately draining what are meant to be retirement savings,\u201d he said.<\/p>\n
The past year has seen a shift in the number of people withdrawing money from their KiwiSaver early for hardship reasons, rather than for a first home.<\/p>\n
Between July 2024 and September 2025, KiwiSaver hardship withdrawal cases surpassed those of first home buyers in every month, according to Inland Revenue data.<\/p>\n
Only one month previously dating back to August 2016 had there been more Kiwis withdrawing money for hardship instead of a first home.<\/p>\n
\u201cThat pendulum has shifted now,\u201d Callanan said. \u201cThere is far more volume in terms of financial hardship.\u201d<\/p>\n
Callanan said he hoped there was some good news on the horizon, particularly with interest rates coming down.<\/p>\n
\u201cThose who are paying off their home loans might have some relief coming their way soon,\u201d he said.<\/p>\n
\u201cThere are hopefully some green shoots in terms of an economic recovery for the country.\u201d<\/p>\n
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.<\/p>\n